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Optum drives strong growth in first quarter for UnitedHealth Group

UnitedHealthcare plan premiums expected to rise in 2018 due to 3 percent insurance tax in Affordable Care Act.

Susan Morse, Managing Editor

UnitedHealth Group on Tuesday released strong first quarter results, driven in no small part by Optum's 16 percent growth in operations.

This is the first quarter UnitedHealth has presented its earning results since withdrawing plans from the Affordable Care Act exchange business.

Uncertainty remains as to the future of the ACA  but the company's health plans are moving forward on the assumption that a 3 percent insurance tax put into place under the law, and deferred for 2017, will return in 2018, according to CEO Stephen Hemsley. This will raise premiums and/or reduce benefits, he said.

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"Affordability can be improved most in the immediate term through lower taxes and we hope Congress acts soon to permanently repeal the health insurance tax before it further worsens consumers' premiums, state budgets and senior benefits," Hemsley said during the earnings call.

UnitedHealth Group net earnings rose to $2.17 billion from $1.61 billion a year earlier.

Net earnings from operations during the first quarter were $3.4 billion, compared to $3 billion during the first quarter of 2016.

Its health benefits arm, UnitedHealthcare showed first quarter earnings from operations of $2.1 billion, compared to $1.9 billion in 2016.

Optum, the health services business, posted earnings from operations of $1.3 billion, compared to $1.1 billion year-over-year.

During the first quarter, Optum revenues grew year-over-year by $1.6 billion or 7.9 percent to $21.2 billion. Optum showed  double-digit percent increases for every reporting segment, including Optum Rx, Optum Health and Optum Insights.

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"We grew earnings from operations by $173 million dollars year-over-year, a 16 percent earnings growth rate on revenue growth of $1.6 billion dollars, virtually all organic," said Optum CEO Larry Renfro.

Optum provides data, analytics and clinical information services to payers, providers, employers, governments, life sciences companies and consumers.

Twitter: @SusanJMorse